Test bank for principles of economics 2nd by mankiw chapter 26a

The natural rate of unemployment isa. zero percent.b. the rate associated with the highest possible level of GDP.c. created primarily by short­run fluctuations in real GDP.d. the amount of unemployment that the economy normally experiences.ANSWER: d. the amount of unemployment that the economy normally experiences.TYPE: M KEY1: D SECTION: INT OBJECTIVE: 1 RANDOM: Y 2

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Unemployment data is collected

a. from firms and unemployment insurance claims.b. through a regular survey of about 60,000 households.c. from payroll data received for tax purposes.d. None of the above is correct.ANSWER: b. through a regular survey of about 60,000 households.TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y 3

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Which of the following people is counted as unemployed according to official statistics?a. Nancy, who is on temporary layoffb. Gary, who has retired and is not looking for workc. Brian, a full­time student who is not looking for workd. All of the above are correct.ANSWER: a. Nancy, who is on temporary layoffTYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y 4

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Who would be included in the labor force?a. Holly, an unpaid homemakerb. Dave, who does not have a job, but is looking for workc. Bruce, a full­time student not looking for workd. None of the above are included in the labor force.ANSWER: b. Dave, who does not have a job, but is looking for workTYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y 5

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The BLS recently reported that there were 45.38 million college graduates over age 16. Of this number 36.08 million were in the labor force and 35.48 were employed. What was the labor­force participation rate and the unemployment rate for this group?a. about 78 percent and 1.3 percentb. about 79.5 percent and 1.7 percentc. about 92 percent and 1.3 percentd. about 98 percent and 1.7 percentANSWER: b. about 79.5 percent and 1.7 percent.

Kay loses her job and decides to sit around home for a few months. Ceteris paribus, the unemployment ratea. increases, and the labor­force participation rate decreases.b. increases, and the labor­force participation rate is unaffected.c. increases, and the labor­force participation rate increases.d. is unaffected, and the labor­force participation rate increases.ANSWER: a. increases, and the labor­force participation rate decreases.TYPE: M KEY1: C SECTION: 1 OBJECTIVE: 1 RANDOM: Y 7

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Which of the following is correct?a. Teenagers have lower labor­force participation rates and lower unemployment rates than do adults.b. Teenagers have lower labor­force participation rates and higher unemployment rates than do adults.c. Teenagers have higher labor­force participation rates and higher unemployment rates than do adults.d. Teenagers have higher labor­force participation rates and lower unemployment rates than do adults.ANSWER: b. Teenagers have lower labor­force participation rates and higher unemployment rates than do adults.TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y 8

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Just after World War II, the labor­force participation rate of women wasa. about 3/5 and currently is 1/2.b. about 1/2 and currently is about 3/5.c. about 1/3 and currently is about 3/5.d. about 1/4 and currently is about 2/3.ANSWER: c. about 1/3 and currently is about 3/5.TYPE: M DIFFICULTY: 3 KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y 9

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Suppose that some people report themselves as unemployed when, in fact, they are working in the underground economy. If these persons were counted as employed, a. both the unemployment rate and labor­force participation rate would be higher.b. the unemployment rate would be higher and the labor­force participation rate would be unchanged.c. the unemployment rate would be lower and the labor­force participation rate would be unchanged.d. both the unemployment rate and labor­force participation rate would be lower.ANSWER: c. the unemployment rate would be lower and the labor­force participation rate would be unchanged.TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y

Christine is looking for work as a financial analyst. Although her prospects are good, she hasn’t yet taken a job. Pam is looking for work in a furniture factory, but there aren’t many furniture companies looking for workers and every time she shows up for an interview, there are many more people than openings. a. Christine is frictionally unemployed and Pam is structurally unemployed.b. Christine is structurally unemployed and Pam is frictionally unemployed.c. Christine and Pam are both frictionally unemployed.d. Christine and Pam are both structurally unemployed.ANSWER: a. Christine is frictionally unemployed and Pam is structurally unemployed.TYPE: M KEY1: C SECTION: 1 OBJECTIVE: 1 RANDOM: Y 11

A typical American worker covered by unemployment insurance receives a. 100 percent of their former wages for 26 weeks.b. 75 percent of their former wages for 50 weeks.c. 50 percent of their former wages for 26 weeks.d. 25 percent of their former wages for 50 weeks.ANSWER: c. 50 percent of their former wages for 26 weeks.TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y

An increase in the world price of oil creates a sectoral shift that probablya. decreases unemployment, and the decrease would be greater in a country with unemployment insurance than in one without.b. decreases unemployment, but the decrease would be smaller in a country with unemployment insurance than in one without.c. increases unemployment, and the increase would be greater in a country with unemployment insurance than in one without.d. increases unemployment, but the increase would be smaller in a country with unemployment insurance than in one without.ANSWER: c. increases unemployment, and the increase would be greater in a country with unemployment insurance than in one without.TYPE: M KEY1: D SECTION: 2 OBJECTIVE: 2 RANDOM: Y 16

Between the 1940s and today, union membershipa. fell from about 1/2 to 1/3 of the labor force.b. fell from about 1/3 to 1/6 of the labor force.c. rose from about 1/6 to 1/3 of the labor force.d. rose from about 1/3 to 1/2 of the labor force.ANSWER: b. fell from about 1/3 to 1/6 of the labor force.TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y

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When a union bargains successfully with an employer, a. the quantity of labor supplied increases but the quantity of labor demanded decreases.b. the quantity of labor supplied increases but the quantity of labor demanded increases. c. both the quantity of labor supplied and the quantity of labor demanded increase.d. both the quantity of labor supplied and the quantity of labor demanded decrease.ANSWER: a. the quantity of labor supplied increases but the quantity of labor demanded decreases.TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y 19

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When unions raise wages in one sector of the economy, the supply of labor in other sectors of the economya. decreases, raising wages in industries that are not unionized.b. decreases, reducing wages in industries that are not unionized.c. increases, raising wages in industries that are not unionized.d. increases, reducing wages in industries that are not unionized. ANSWER: d. increases, reducing wages in industries that are not unionized.TYPE: M DIFFICULTY: 3 KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y

Right­to­work lawsa. prevent employers from hiring permanent replacements for workers who are on strike.b. allows employers to replace workers who are on strike.c. guarantee workers the right to form unions.d. give workers in a unionized firm the right to choose whether or not to join the union.ANSWER: d. give workers in a unionized firm the right to choose whether to join the union.TYPE: M KEY1: D SECTION: 4 OBJECTIVE: 4 RANDOM: Y 21

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Angela is the newly appointed CEO of a company that manufactures computer chips on an assembly line. Her staff has told her that given productivity numbers, they suspect some workers may be shirking. According to efficiency wage theory, what should she do?a. Pay all workers more than the equilibrium wage rate.b. Reward those who shirk with higher wages.c. Pay below the equilibrium wage rate to make up for the loss from shirking.d. Make sure that workers are getting paid exactly the equilibrium wage rate.ANSWER: a. Pay all workers more than the equilibrium wage rate.TYPE: M KEY1: C SECTION: 4 OBJECTIVE: 4 RANDOM: Y 22

An efficient wage designed to ensure that quality workers are hired is designed principally to reducea problem created by a. adverse selection, but it also increases unemployment.b. adverse selection, but it also decreases unemployment.c. moral hazard, but it also increases unemployment.d. moral hazard, but it also decreases unemployment.ANSWER: a. adverse selection, but it also increases unemployment.TYPE: M KEY1: C SECTION: 5 OBJECTIVE: 5 RANDOM: Y 24

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Which of the following explanations of the natural rate of unemployment is most important for the U.S. economy?a. job searchb. minimum wage lawsc. unionsd. Economists have not determined the answer to this question.ANSWER: d. Economists have not determined the answer to this question.TYPE: M KEY1: D SECTION: 6 OBJECTIVE: 4 RANDOM: Y 25